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Be Your Own Boss

How to manage money on a sporadic income.

Going to work in your slippers is a less-than-cushy feeling when you don't know what next month's income might be. When you are The Boss Man, the role of chief financial officer is even more important to your everyday well-being.

Small business owners, freelancers, and contractors know the feast-or-famine nature of a sporadic income, says debt counseling firm Money Management International. If your paycheck is irregular, planning and budgeting are just as important as soliciting work. Here are some practical tips on keeping the cash flowing:

Average out your expenditures. If you're not tracking your expenses now, do it for three months. Don't forget to include the monthly costs of health-care premiums, taxes, and office supplies. Knowing where your money really goes will help head off any end-of-the-month surprises.

Free up your cash flow by regulating your expenses. Many utility companies offer balanced billing options so that horrendous winter heating bill is spread out evenly over the year. Go for the monthly payment on auto insurance if there is no extra cost.

Build a safety net for lean months. Start socking money away in a short-term savings account today. Whether it's three or six months of living expenses depends on your situation. If you have dependents, the more savings the better. Even if you can only put a minimum amount in, it's better than relying on Mr. Visa when money gets tight.

Don't rely on lines of credit to make ends meet. If you do have to occasionally charge your expenses, promise to use any future windfall to get you back on debt-free ground.

Make a family financial plan. Married to a regular wage earner? Go give him or her a smooch and then discuss (civilly, please!) using that income for the essentials and the irregular paychecks for savings and extravagant gifts.

Earmark your savings. Knowing where to save and invest money for your current and future self makes it less tempting to blow unplanned moolah on frivolities. If you aren't sure, seek the help of a qualified pro.